THE ORIGINS OF THE EAST ASIAN INCONGRUITIES IN THE MADDISON PROJECT DATABASE

Abstract

The income gaps between Korea and her two richer neighbors, Japan and Taiwan in 1935, estimated by the Maddison Project using the backward projection method from 1990, are significantly different from the results based on directly comparing the price levels of 1935. We explore the sources of error in the estimation of PPP using GDP deflators. We find that the errors from the conceptual differences between PPP and GDP deflators are not large or systematically biased; the majority of errors come from the inconsistency of the two data sets, and the selection of the benchmark year. We estimate the GDP per capita of East Asian countries without incongruities, using information from all benchmark years available.